Tokenization Market Size was valued at USD 4.8 billion in 2021. The tokenization market industry is projected to grow from USD 5.76 Billion in 2022 to USD 20.63 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 20% during the forecast period (2022 - 2030). Some major factors driving the tokenization market growth are the increased adoption of online payment methods and the rise in security concerns associated with digitizing sensitive data.
Figure 1:Â Tokenization Market Size, 2022-2030 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review
The growing proliferation of digital payment methods to drive market growth
Before COVID-19, digital payments were on the rise; however, the nationwide lockdowns precipitated a massive shift in consumer purchasing behavior and government policies and regulations, leading to an increase in eCommerce. These factors have accelerated the acceptance of digital payment transactions across multiple industries, necessitating the development of safeguards to secure online payments. According to McKinsey & Company (U.S.), more than 82% of Americans used digital payments in October 2021 and demanded faster, easier, and safer payments. The emergence of contactless payments presents numerous challenges, particularly regarding security. Businesses in retail, dining, banking, and insurance use tokenization as a protective measure to substitute sensitive information with a one-of-a-kind code called a token to prevent security breaches brought on by the prevalence of contactless payments.
Businesses and customers are looking for solutions to reduce risk exposure and strengthen compliance obligations as security breaches and threats have increased in frequency in digital payments. In addition, the use of payment cards is declining due to fraud and inaccurate or out-of-date information, negatively impacting customer satisfaction and lost sales. Network tokenization is thus being adopted by businesses as one of the best payment solutions to get around these obstacles.
Based on the application area, the tokenization market segmentation includes user authentication and payment security. The payment security tokenization segment held the majority share in 2021, accounting for approximately 51-55% of the tokenization market revenue. This segment's large market share can be attributed to the increased demand for advanced payment security solutions for eCommerce, the increased use of payment applications across various industries, and the growing need to secure online business-sensitive transactions from highly advanced cyberattacks. The rise of digital payments has prompted banks and payment application developers to implement this solution to help protect consumers' sensitive data. As QR-code payments have increased since the pandemic, tokenization enables users to make quick payments without fear of their sensitive card data being compromised. This data security solution has a solid security foundation, improving payment applications' effectiveness.
Figure 2: Tokenization Market, by Application Area, 2021 & 2030 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review
Based on deployment, the tokenization market segment includes on-cloud and on-premises. On-Cloud dominated the market in 2021 and is expected to be the fastest-growing segment during the forecast period of 2022-2030. In the tokenization industry, cloud deployment is becoming more popular. SMEs consistently use cloud deployment solutions to help them focus more on their core competencies rather than investing capital in payment infrastructure. Using cloud-based solutions, companies can significantly reduce the costs associated with hardware, software, storage, and technical staff. The rise in cloud-based payments and processes managing sensitive data is driving the expansion of the cloud deployment segment. Tokenization requires an active internet connection in this deployment segment to connect to the cloud.
The tokenization market segmentation, based on the organization size, includes SMEs and large enterprises. The SMEs segment had the highest market revenue share in 2021. SMEs primarily use tokenization services and solutions to fulfill obligations and reduce fraud risks. One of the main objectives of attackers targeting SMEs is to use their applications to access client information, payment information, and other private information. Cybercriminals take advantage of SMEs' lax security by automating the attack of thousands of applications at once. SMEs increasingly turn to cloud-based tokenization solutions to save money, time, and resources. TaaS (Tokenization as a Service) helps SMEs overcome their financial limitations. As a result, more and more SMEs are adopting cloud-based tokenization programs, positively affecting the SME's tokenization market to expand.
Based on the end-user, the tokenization market segment includes retail, government, and BFSI & commercial. In 2021, the BFSI & commercial segment held the highest market revenue share. In their service offerings, companies in this industry handle extremely sensitive data. The BFSI industry makes significant investments to protect this data and prevent malicious data breaches. The proliferation of digital payments and financial services has increased the industry's reliance on and use of tokenization. Cybercriminals target this industry due to its high volume of financial transactions. As a result, the industry consistently seeks advanced payment security products and services to protect its employees, customers, assets, branches, operations, and offices; as a result, it controls most of the tokenization market by end users.
Tokenization Regional Insights
By Region, the study provides market insights into North America, Europe, Asia-Pacific, and the Rest of the World. The North American tokenization market is anticipated to expand at a significant CAGR during the study period, accounting for USD 2.09 billion in 2021. The CCPA and rising cyberattacks, particularly payment fraud across industries, are expected to increase regulation and boost demand for tokenization products and services in North America. The popularity of digital-first credit cards and contactless cards among consumers in North America is expected to support the development of tokenization. Rapidly expanding eCommerce, smartphone consumption for online payments, and access to various services such as online gaming, online streaming, and other government services are all driving market growth in North America.
Moreover, the major countries covered in the market report include the United States, Germany, Canada, France, the United Kingdom, Italy, Spain, India, Japan, Australia, China, South Korea, and Brazil.
Figure 3: TOKENIZATION MARKET SHARE BY REGION 2021 (%)
Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review
The European tokenization market is the world's second-largest owing to the huge amounts of technology and digitizing data. Europe is geographically located in the center of the world, which helps connect international markets; as a result, the region is heavily investing in all businesses, including digital services, which use tokenization to protect sensitive data. The European markets are in the innovation stage, making them exponentially more reliable for tokenization. Further, the German tokenization market held the largest market share, and the France tokenization market was the fastest-growing market in the European region.
The Asia Pacific tokenization market is expected to grow at the fastest rate of CAGR during the forecast period. Government initiatives to prevent financial fraud and nation-specific compliance laws intended to improve cybersecurity are predicted to fuel demand for efficient tokenization solutions in the region. Other factors influencing the adoption of tokenization solutions include the rise in smartphone use for online shopping and transactions and the quick uptake of online transactions, which has led to an influx of new cyber threats. As a result, there are now more customers, making tokenization technologies necessary to safeguard and strengthen payment procedures. Consumers in the region use various payment methods for online transactions within and outside their home countries. As a result, Asia Pacific businesses face increased demand for secure payment methods. Moreover, China’s tokenization market held the largest market share, and the Indian tokenization market was the fastest-growing market in the Asia-Pacific region.
There are several top-tier players in the market, many of which have subsidiaries in the same industry. The digital revolution and processing of sensitive data with data security solutions increase as technology advances. Large and medium-sized businesses predominate in North America and Europe. The competition is fierce, despite the limited availability of substitutes. Technology advancement enables businesses to guarantee the security of sensitive data while boosting overall productivity.
The constant advancement of technology leads to a more widespread and standardized market, even if it necessitates significant investment. The tokenization trend has spread across many markets due to globalization. Companies are focusing on using tokenization to enable merchant system interaction with customer wearables.
The Lookout security platform safeguards your data in the cloud while protecting your devices from malware and other threats. Lookout, a US-based application server security firm, acquired CipherCloud for an undisclosed sum in March 2021. This integrated approach will assist Lookout in closing gaps when businesses use multiple products from various security vendors. CipherCloud is a software company based in the United States specializing in cloud application discovery and risk assessment, data security, tokenization, data loss prevention, searchable encryption, key management, and malware detection.
Futurex LP, also known as Futurex, is a privately held information technology company based in Texas specializing in cryptography. For businesses like banks, retailers, and terminal makers, Futurex offers data encryption solutions. Futurex introduced the new version of its VirtuCrypt financial cloud hardware security module (HSM) service in June 2020. These services met the critical payment system cryptography and prime management needs of financial services companies in the cloud.
October 2022: American Express partnered with Goldman Sachs to provide large corporate clients with cloud-based payment solutions. American Express would use Goldman Sachs' Transaction Banking (TxB) system platform to provide multiple payment options, making large companies' B2B payments easier and more efficient.
September 2020: CipherTrace, a renowned cryptocurrency intelligence firm, was purchased by Mastercard. Combining Mastercard's cybersecurity solutions and CipherTrace's digital assets would provide greater transparency to businesses, assisting them in identifying risks.
User Authentication
Payment Security
On-Cloud
On-Premises
SMEs
Large Enterprise
Retail
Government
BFSI & Commercial
North America
US
Canada
Europe
Germany
France
UK
Italy
Spain
Rest of Europe
Asia-Pacific
China
Japan
India
Australia
South Korea
Australia
Rest of Asia-Pacific
Rest of the World
Middle East
Africa
Latin America
| Report Attribute/Metric | Details |
| Market Size 2021 | USD 4.8 billion |
| Market Size 2022 | USD 5.76 billion |
| Market Size 2030 | USD 20.63 billion |
| Compound Annual Growth Rate (CAGR) | 20% (2022-2030) |
| Base Year | 2021 |
| Market Forecast Period | 2022-2030 |
| Historical Data | 2018 & 2020 |
| Market Forecast Units | Value (USD Billion) |
| Report Coverage | Revenue Forecast, Market Competitive Landscape, Growth Factors, and Trends |
| Segments Covered | Application Area, Deployment Mode, Organization Size, End-User, and Region |
| Geographies Covered | North America, Europe, Asia Pacific, and the Rest of the World |
| Countries Covered | The U.S, Canada, Germany, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil |
| Key Companies Profiled | Symantec Corporation (US), Gemalto NV (Netherlands), Fiserv Inc (US), Paymetric Inc (US), First Data Corporation (US), CipherCloud (US), Futurex (US), CardConnect Corp. (US), 3Delta Systems Inc (US), and Thales e-Security Inc (US) |
| Key Market Opportunities | An upsurge of contactless payments for all businesses |
| Key Market Dynamics | Growing concerns about cyberattacks and financial fraud Increasing demand for cloud-based tokenization solutions and services |
Frequently Asked Questions (FAQ) :
The tokenization market size was valued at USD 4.8 Billion in 2021.
The market is projected to grow at a CAGR of 20% during the forecast period, 2022-2030.
In 2022, North America had the largest revenue share of the market.
The key players in the market are Symantec Corporation (US), Gemalto NV (Netherlands), Fiserv Inc (US), Paymetric Inc (US), First Data Corporation (US), CipherCloud (US), Futurex (US), CardConnect Corp. (US), 3Delta Systems Inc (US), and Thales e-Security Inc (US).
The payment security category dominated the market in 2021.
In 2021, the on-cloud had the largest market share.
Research Analyst Level II With a technical background in information technology & semiconductors, shubham has 4.5+ years of experience in market research and analytics with the tasks of data mining, analysis, and project execution. he is the poc for our clients, for their consulting projects running under the ict/semiconductor domain. shubham holds a bachelor’s in information and technology and a master of business administration (mba). shubham has executed over 150 research projects for our clients under the brand name market research future in the last 2 years. his core skill is building the research respondent relation for gathering the primary information from industry and market estimation for niche markets. he is having expertise in conducting secondary & primary research, market estimations, market projections, competitive analysis, analysing current market trends and market dynamics, deep-dive analysis on market scenarios, consumer behaviour, technological impact analysis, consulting, analytics, etc. he has worked on fortune 500 companies' syndicate and consulting projects along with several government projects. he has worked on the projects of top tech brands such as ibm, google, microsoft, aws, meta, oracle, cisco systems, samsung, accenture, vmware, schneider electric, dell, hp, ericsson, and so many others. he has worked on metaverse, web 3.0, zero-trust security, cyber-security, blockchain, quantum computing, robotics, 5g technology, high-performance computing, data centers, ai, automation, it equipment, sensors, semiconductors, consumer electronics and so many tech domain projects.
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